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23 November, 14:37

An investment firm offers three types of equity investments,

A, B, and C. Of the firm's clients, 30% invest in A, 50% invest

in B, and 20% invest in C. The rates of return are 10%, 6%,

and 7% for A, B, and C, respectively. What is the expected

value of the total return rate for the firm's clients?

6.2%

7.1%

7.4%

8.2%

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Answers (2)
  1. 23 November, 14:49
    0
    7.1

    Step-by-step explanation:

    A, B, and C. Of the firm's clients, 30% invest in A, 50% invest in B, and 20% invest in C. The rates of return are 10%, 6%, and 7% for A, B, and C, respectively. 7.1 plato
  2. 23 November, 18:23
    0
    The expected value of the total return rate for the firm's clients is C. 7.4%

    Step-by-step explanation:

    1. Let's review all the information given for solving the question:

    Type of equity investments = A, B and C

    Percentage of investment in each type of equity = 30% in A, 50% in B and 20% in C.

    Rates of return of each type of equity investment = 10% for A, 6% for B and 7% for C.

    2. Let's find the expected value of the total return rate for the investment firm:

    Return rate for each type of investment = Percentage of investment * Rate of return

    For A = 30% * 10% = 0.3 * 0.1 = 0.03

    For B = 50% * 6% = 0.5 * 0.06 = 0.03

    For C = 20% * 7% = 0.2 * 0.07 = 0.014

    Total return rate = Return rate for A + Return rate for B + Return rate for C

    Total return rate = 0.03 + 0.03 + 0.014 = 0.074

    Total return rate = 0.074 * 100 = 7.4%

    The expected value of the total return rate for the firm's clients is C. 7.4%
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